Evidence of meeting #78 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was norway.
A recording is available from Parliament.
5:15 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Do I understand you correctly? Effectively, the tax code in Alberta is discriminating against the oil sands.
5:15 p.m.
Director and Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual
That's including both corporate taxes and the way they relate to the royalty. The royalty in Alberta has been very well structured. It's very similar to the supplementary tax they have in Norway, where in principle it's supposed to be a rent tax. There are no rents at the margins, so you shouldn't have any royalties paid at that margin. I won't go into all the technical stuff, but an interaction goes on between the corporate tax and the royalty, which is something that I've pointed out now in a number of publications, including one in Australia. When you increase the royalty rate, it raises that marginal tax rate. In principle, it shouldn't do that. It's because of those interactions.
5:15 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Is that something we should look at? I'm no expert on this or even close to it. Should we look at a change in the federal corporate tax so it is more revenue neutral?
5:15 p.m.
Director and Palmer Chair in Public Policy, School of Public Policy, University of Calgary, As an Individual
I believe that corporate tax should be neutral across industries. It's not right now. This is one point I would totally agree with Gil on, because we have a bias in Canada toward resource industries and manufacturing, but we keep hammering other types of industries in the economy, particularly on the service side where a lot of growth is. I'm a great believer in trying to get more neutrality in the system. I would like to try to see our continuing to move toward that goal.
5:15 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
We haven't talked a lot about other things than oil today. We'll do it another day. Are there any comments on diversification, particularly of our gas resources? As much as I'd like it, given that I'm from Saskatchewan, I doubt anyone's got a comment on uranium. Does anyone have any comments on the things that we need to do with gas and electricity but haven't commented on today?
5:15 p.m.
Conservative
The Chair Conservative Leon Benoit
Let's take a comment from one of you.
Mr. Wiborg, go ahead please.
5:15 p.m.
Engineer, As an Individual
This may be an interesting one for you. Norway has one LNG facility. It's way up there, close to the Barents Sea in the Arctic. That was developed mainly for the American market. Statoil built a part of an ...energy terminal to be able to get it into the U.S.
Today, we have shipped several LNG boats all the way to the Asian market. You are a lot closer to Asia than we are. The question in my mind for you is that you should look at your gas resources and [Inaudible--Editor] that toward the need for heating in the tar sands. Oil is more valuable than gas in the international market, even the bitumen. Upgraded, it improves. Refined, it improves a lot. You need gas to be able to do that. It's a question of going back to the old policies from the 1970s of the Alberta Energy Resources Conservation Board when the tar sands were able to buy gas cheaply so that they could produce all at the Syncrude plant. In 1974, that operation was not profitable. It was only the low Canadian gas price that made it happen.
You shouldn't go back to that, but you need to take a look at the overall Canadian energy situation, the energy situation of all the provinces—Alberta, Saskatchewan, British Columbia, etc.—and balance it for the Canadian voter...mostly U.S. companies, or for that matter all the foreign companies like Statoil.
5:20 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Wiborg.
Mr. Garneau, you're probably only going to get one short question.
Go ahead, Mr. Julian.
5:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you, Mr. Chair.
I wanted to come back to an issue that has been part of the discussions around Canada's export strategy. When we look at Keystone, what's happening in the United States is a strong reaction by the public and many people in the administration. Canada's lamentably bad record on fighting climate change and on environmental initiatives under this current government has tarnished the country's ability even to look at export markets. I know that Mr. Mintz is on the record as saying the federal government should get started on taxing carbon emissions sooner rather than later to avoid a patchwork of provincial carbon taxes.
Mr. Mintz has said very clearly that there should be a price on carbon. That's important. He said that in 2008, and I believe he was a government witness. It's very interesting that he disagrees with the Conservatives on this.
I wanted to know from you, Mr. McGowan, Mr. Willis, and Mr. Wiborg, whether you feel that putting a price on carbon is an important component.
5:20 p.m.
Conservative
The Chair Conservative Leon Benoit
Are you going to work that in with market diversification in some fashion, Mr. Julian?
5:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Mr. Chair, I just spoke to the whole issue around Keystone and market diversification, and the problems that the lack of action by this Conservative government are provoking with Keystone.
That was in my preamble.
5:20 p.m.
Conservative
5:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
I thought it was pretty clear to everybody that there was a very clear tie-in with market diversification.
5:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
To Mr. McGowan, because he is a very intelligent and very adept gentleman, and he gave one of the best presentations we've heard.
5:20 p.m.
President, Alberta Federation of Labour
It's interesting that you asked the question, because just last week our federation, which represents 27 unions and 160,000 unionized Albertans—I underline that, “Albertans”—passed a policy statement, a policy paper, on carbon taxes.
Our unions, including those representing energy workers, are 100% in support of the introduction of a more aggressive carbon tax. The Alberta carbon tax, at only $15 a tonne, is not doing the job of providing an incentive to clean up the industry's act.
Interestingly, one thing we included in our policy paper was the fact that industry itself is asking the provincial and federal governments to act. In fact, some people in industry are saying that they would accept a carbon tax as high as $100 per tonne, which is eight times higher than the current level.
Industry says they've already been working it into their plans and their projections about cost. Honestly, it would allow us to get rid of the black eye the Canadian energy industry has abroad. That black eye is significant. Politics matters when some of our potential markets might be closing themselves down to access by Canadian products.
So it's in our best interest. Industry wants it. It will improve our reputation. It will help with market access.
Let's get on with it and have a really significant carbon tax in this country.
5:25 p.m.
Director, Natural Resources and Environmental Policy, Canadian Chamber of Commerce
Thank you for your question.
I touched briefly on the need for a responsible energy policy to go—again, in the chamber's view—hand in hand with market diversification.
In a former life, I was a climate negotiator for the Canadian government. When you travel internationally, you learn very quickly that people aren't terribly interested in whether something is an Albertan problem, or a Newfoundland problem, or an Ontario problem: it's a Canadian problem.
As soon as we leave our border, it would be a lot easier for us to hold our heads high if there were a price on carbon. I think it would enable some of what we're talking about today.
5:25 p.m.
Engineer, As an Individual
There may be a slightly different viewpoint from the European side.
A carbon tax makes sense as a soapbox issue. If there were a serious threat that bitumen from the tar sands would not get to the world market because of CO2 carbon tax issues, then of course—but it's just a way of taxing royalties.
The question is what are you going to use the money for? Is it going to go toward better environmental production, policies, technologies in Canada that you can transport and sell to the world? You might be a winner. We tried that one, and some of the industry won.
But look at Europe today, at the European common market. Look at the U.K. Look at Germany. They have ended up with energy that is so expensive that their industry has moved out. They are really short of possible jobs. The youth in Europe, 25% to 50%, are without jobs. This is the age group of 25, plus or minus.
I don't believe a carbon tax is the answer that people thought it was when they thought that the Kyoto plan would continue. Unless China, India, and other nations that are now out-producing us cost-wise apply it, or we apply a tariff that boosts charges on the import product when they don't have carbon tax in that nation, I think it's a losing way for everybody.
We have really exported jobs, which are going to nations that are using coal to fire their power plants. That pollution ends up everywhere, ladies and gentlemen—everywhere. The globe doesn't have borders in the atmosphere.
5:25 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you very much.
Mr. Garneau, we're out of time. I apologize. I'll try to tack a little bit on to your questioning next time.
Thank you very much to all the witnesses today: as an individual, Dr. Jack Mintz, director and Palmer Chair in Public Policy, University of Calgary; from the Alberta Federation of Labour, Mr. Gil McGowan, president; from the Canadian Chamber of Commerce, Scott Willis, the director of natural resources and environmental policy; and, by video conference from Stavanger, Norway, as an individual, Dr. Rolf Wiborg, an engineer.
Thank you very much to all of you. All the best.
The meeting is adjourned.